Shop prices in the UK saw their largest rise since April 2024 this month, driven by accelerating food inflation.
Data from the BRC-NIQ Shop Price Monitor (SPM) shows overall shop prices in July were up by 0.7% in annual terms after a 0.4% rise in June.
Food prices jumped by 4.0%, accelerating from a 3.7% increase in the previous month. This is the biggest rise since February 2024 and comes after the cost of staples such as meat and tea were pushed up by tighter supplies on global markets.
Fresh food inflation held steady at 3.2% in July, whilst ambient food inflation increased from 4.3% to 5.1%.
Meanwhile, non-food prices were down 1.0% this month, following a decline of 1.2% in June, with shoppers benefiting from discounts in fashion and furniture.
“Consumers’ household budgets are coming under pressure with the food retailers now seeing price increases above CPI,” said Mike Watkins, Head of Retailer and Business Insight, NIQ. “However, price competition helped by promotional activity will still mean that shoppers can save money by shopping around.”
He noted that with inflation on the rise, high street retailers will be concerned about customer retention over the summer holiday season, while Helen Dickinson, Chief Executive of the BRC, stated that the government needs to think carefully about the next Budget if it wants to support struggling families.
“Retailers are doing everything possible to protect their customers from the worst of the inflationary pressures, but the £7bn cost to retail of last year’s Budget forced most retailers to raise prices,” she said.
“Further tax rises will ultimately hurt households, locking in inflation and forcing people to pay higher prices to put food on the table.”
Separate research published last week by Worldpanel showed that just under two-thirds of households are very concerned about the cost of their grocery shopping, and people are adapting their habits to avoid the full impact of price rises.
NAM Implications:
- And these real stats…
- The key is the extent to which the cash-strapped consumers’ buying behaviour is being driven by their perception that their inflation is ‘much worse’.
- In an era where trust has been the greatest casualty…
